Buy The Ramco Cements; target of Rs 1019: KR Choksey

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KR Choksey's research report on The Ramco Cements

In Q3FY22, Ramco Cement’s revenue rose 15.5% YoY and 4.0% QoQ to INR 15,525 mn, beating our estimate by 1.5%. Weak demand had persisted during the quarter due to monsoons, restrictions etc. EBITDA dropped 42.5% YoY and 41.3% QoQ to INR 2,289 mn. EBITDA margin contracted by 1488 bps YoY/1136 bps QoQ to 14.7% in Q3FY22 due to sharp increase in raw material prices. Adj. Pat for the quarter declined 63.1% YoY and 63.2% QoQ to INR 757 mn. The margins also contracted by 1039 bps YoY and 889 bps QoQ to 4.9% in Q3FY22.

Outlook

At a CMP of INR 861, we are optimistic about the company’s growth prospects and apply an EV/EBITDA multiple of 14.5x to FY24E EBITDA, which yields a target price of INR 1,019 per share (v/s previous TP of INR 1,176 per share), an upside of 18.4% over the CMP. Accordingly, we maintain our ‘BUY’ rating on the shares of Ramco Cements.

More Info

At 16:00 hrs The Ramco Cements was quoting at Rs 895.65, down Rs 1.15, or 0.13 percent.

It has touched an intraday high of Rs 910.00 and an intraday low of Rs 886.00.

It was trading with volumes of 14,937 shares, compared to its thirty day average of 23,460 shares, a decrease of -36.33 percent.

In the previous trading session, the share closed up 2.98 percent or Rs 25.95 at Rs 896.80.

The share touched its 52-week high Rs 1,130.95 and 52-week low Rs 768.65 on 20 July, 2021 and 01 February, 2021, respectively.

Currently, it is trading 20.81 percent below its 52-week high and 16.52 percent above its 52-week low.

Market capitalisation stands at Rs 21,163.53 crore.

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